Dec 4, 2012

Vietnam - Light to appear at end of the tunnel

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Vietnam Chamber of Commerce and Industry chairman and co-chairman of the Vietnam Business Forum (VBF) Consortium Vu Tien Loc shines further light on how the government will support the struggling business community to get through current tough period.

Information on business dissolutions has continually appeared on newspapers. Over 70 per cent of firms lodging tax declarations with Hanoi Tax Department ran at losses. Is this true?

The Vietnamese corporate picture is fairly clear at this point of time. The first group consists of competitive businesses which are evolving in the right direction. Most of them are medium sized.

The second group encompasses underperforming ones with low competitiveness, while remaining businesses are those having an ability to compete, but temporarily facing difficulties.

This must be acknowledged, from there working out suitable remedies to each group. We have outlined a comprehensive draft plan to help firms weather the storm which will be forwarded to the government in VBF 2012 which was launched yesterday.

Will there be suitable cures for each business group?

First of all, we need to regain confidence from investors and the business community at home and abroad which involves institutional reforms and stabilizing the macro-economy.

The business community needs a clear policy message and explicit acts manifested the government’s commitments in materialising the targets for macro-economic stability, banking sector, state enterprises and public investment restructuring striving for long-term growth. The message would help steer firms in the right direction.

The second measure group involves government support in information provision, consultation, training, investment and trade promotion to help firms bolster competitiveness. Little attention was given to this aspect in the past years.

A recent survey made by members of Ho Chi Minh City leading businesses club showed that only 15 per cent of firms have prepared for 2015 when Vietnam will fully realise AFTA commitments.

The fault is largely on firms’ side, but government support in information, orientations and skill is of paramount importance.

What are the solutions for each specific business group?

We need to hold on emergency measures to help firms resist current tough period. The beneficiaries are mainly businesses categorised in the third group which temporarily face hardships but having development potential.

Businesses in the second group which are ineffective ones should willingly accept elimination. These firms, if they survive, would detrimentally influence the competitiveness of the whole economy.

Defining firms in this second group will not be easy. True?

Yes. Remedial measures should be handled with each project and enterprise instead of each economic sector or each field. Besides, banks, local governments and business associations must team up to be able to draw a complete picture about each project and business pursuing the target of directing support to the right direction.

At this time, banks need to expand credit while firms are thirsty of capital. The matter is striving to direct still limited capital sources to the right address.

Khanh An |

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